After years of predictions, mobile payments have reached mainstream acceptance and are providing opportunities for small businesses to increase their sales and improve their cash flow.
Whether it’s ringing up sales on a web-connected tablet, swiping payment cards with a mobile device reader, or accepting payments via a smartphone app, mobile technologies are common among consumers and business owners.
In addition to the convenience for businesses and their customers, the touch-free nature of mobile payments has become more important as a result of the COVID-19 pandemic and provided the mobile payment sector with a significant boost.
Tablet POS Platforms
Mobile technologies have made considerable inroads in replacing traditional point-of-sale (POS) terminals, especially among smaller retailers, restaurants, cafes and similar establishments. For newer companies, mobile POS systems provide powerful functionality without the need to invest in expensive equipment or software.
Instead, a tablet-based system allows employees to enter transaction data on a touchscreen device and to swipe a payment card. The customer has the choice of having an emailed receipt, or the tablet may be connected to a small printer.
Most POS systems include barcode scanning and inventory management capabilities that improve the efficiency of your transactions and support administrative tasks such as reordering inventory.
While the ability to accept payment cards is the primary motivation to adopt a mobile payment service, most platforms also allow you to generate detailed reports about your sales.
Many systems also include industry-specific software that accommodates different needs. For example, some platforms may allow you to split tickets between patrons, track employee timesheets, calculate your tax obligations and perform other back-office functions.
Some platforms also include customer loyalty or email marketing programs that help you stay in touch with customers between transactions and potentially increase engagement and sales.
Payment Card Swipe
Another mobile payment technology with wide consumer acceptance is swiping a traditional payment card with a reader plugged into a smartphone or tablet. Mobile payments are especially convenient for businesses that perform services at customer locations, such as repair shops, plumbers, contractors, delivery services and similar companies.
Instead of dealing with a bulky card reader and having to enter payment information manually after the service is completed, your field tech or customer service rep can swipe your customer’s card immediately. The customer then “signs” with his or her finger on the device, and they receive an emailed receipt.
Along with the convenience of accepting the payment remotely, using a card swipe gives you faster access to the actual payment because most processors deposit funds the next day. There’s no need to wait for a batch process before funds are available.
Although mobile swipe services were designed to accept payments remotely, they can also be beneficial to very small businesses, including sole proprietors, who need to accept payment cards but do not have the volume to justify establishing a merchant account.
Payment processors usually assess a fee for each transaction. For many small businesses, this is likely to be less expensive than traditional payment card transactions. Businesses with a consistent volume of payment card transactions may wish to upgrade to a plan with a monthly service charge and lower fees for individual transactions.
Popular service choices include Square, PayPal Here, QuickBooks GoPayment and others.
Digital Wallets
Digital wallet apps that depend on near field communications (NFC) chips or optical scanners represent another popular segment of the mobile payment market.
Digital wallets rely on consumers storing payment or account data on their smartphones and completing transactions by holding the devices near readers installed at a merchant’s POS. Payment data is transmitted wirelessly between the device and the merchant’s terminal.
Because the payment data is encrypted, digital wallet transactions are typically faster and more secure than swiping a magnetic strip credit or debit card.
Digital wallets can be used to store different types of data, including payment details, loyalty cards, event tickets, boarding or building-entry passes, and more. Basically, any type of data can be encoded into a readable data format is a good candidate for digital wallets.
Digital wallet capabilities are installed in the Android and iOS operating systems, which is prompting broader consumer acceptance as digital transactions are accepted in a wider variety of locations.
Transaction Security
All the mobile payment systems listed above have a number of security features, starting with Payment Card Industry (PCI) security compliance and the automatic encryption of customer and payment data.
As mobile payments become more common, consumers are more accustomed to seeing the companies they patronize embrace the technology.